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All eyes remain on Europe, but I’m not talking about the cruise-ship disaster in Italy (more on that in a moment). I’m talking about a couple of Fridays ago when, after markets closed, S&P cut the triple-A rating on France and Austria one notch to AA-plus. At the same time, the ratings agency affirmed Germany’s triple-A rating. But it also lowered ratings on Spain (two notches to A), Italy (two notches to BBB+) and Portugal (two notches to BB).

This is all well and good, but — as always seems to be the case with S&P — what matters most is not what it says, but what the market says. And the market basically gave S&P a rousing Bronx cheer. “Tell us something we don’t already know,” investors said. Just as it happened last August — when S&P dropped its rating on U.S. debt — prices actually rose and yields fell.

So much for being on top of the situation.

For instance, French bonds ticked up and yields fell a smidge, while Italy’s bonds were flat and then rallied after the U.S. began trading after the Martin Luther King holiday last week.

Here at home, producer prices moderated last month. And it was really just light-truck prices that pushed the core (ex-food and energy) higher. Inflation doesn’t seem to be building much, and while worrywarts persist with fear of incendiary price increases, the Fed is far from any rate hikes to counter those fears.

I’ve talked several times about the V-shaped U.S. recovery that so many economists have pooh-poohed. But when you look at, say, industrial production, which jumped again in December after a decline in November, the rebound off the bottom has been strong, and yes, V-shaped in trajectory — just like the leading indicators or any other number of economic metrics. The U.S. economy is beyond recovery and into expansion, though housing and labor are still the odd men out in that equation — but are looking better all the time.

I said I’d talk about the cruise ship disaster and, yes, it was a terrible tragedy for those on the boat.

Financially, for those invested in Vanguard Selected Value (MUTF:VASVX), it was only a minor inconvenience, but an inconvenience nonetheless. Following the weekend of the Costa Concordia tragedy, the ship’s owner, Carnival Cruise Lines (NYSE:CCL), saw its stock take an almost 14% dive on Tuesday. Competitor Royal Caribbean Cruises (NYSE:RCL), the No. 1 holding at Vanguard Selected Value, dropped a bit more than 6% in sympathy as investors manned the lifeboats and bailed out of cruise operators.

Vanguard Selected Value dropped 0.3% on Tuesday compared to the market’s 0.3% gain, and Vanguard Mid-Cap Value Index‘s (MUTF:VMVIX) flat finish. The fund continued to lag Wednesday and Thursday, but I suspect the managers, Mark Giambrone and Jim Barrow, were buying while cruise-line shares were sinking.

We’ll see how that pans out in the weeks ahead, but I wouldn’t advise abandoning Vanguard Selected Value’s ship.